One significant factor in setting insurance premium rates is the expected severity of losses, i.e., the anticipated costs of resolving claims. It is known to consider predicted rates of inflation of overall price levels in attempting to estimate future claim severity, but experience has shown that such estimates may tend to be inaccurate. This is because overall inflation trends are not necessarily indicative of changes in the costs of settling claims.
The present inventor has recognized that one way to approach this problem is by referring to pricing in certain derivatives markets. More specifically, the inventor has recognized that pricing of commodities futures contracts may provide the type of forward-looking insurance premium pricing guidance that overall inflation rates fail to adequately provide.